In the ever-exciting McClatchy-Knight Ridder deal, an odd development has surfaced in a regulatory filing. In order for McClatchy Co. to receive regulatory clearance for its $6.5 billion purchase of Knight, it sold four papers to MediaNews Group Inc. for $1 billion. In turn, privately-held MediaNews borrowed $350 million in order to close the deal. Nothing shocking so far. However, one of the dozen lenders is the philanthropic Bill & Melinda Gates Foundation, which usually donates money to non-profits that combat disease across the globe. Obviously the newspaper business has seen hard times with the ever-growing popularity of online news sites managed by Yahoo!, MSN and other Internet portals and the fast-growing blog phenomona. Despite the industry's inability to meet Wall Street expectations for earnings, most newspapers are for profit organizations, so the investment seems odd. Perhaps the charity could justify the loan under the auspices that newspapers provide a public service. Unfortunately, the charity refuses to comment to the media about the loan. —Matthew Wurtzel
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